Law:

Section:

Section 256 of the Income-tax Act, 1956 [Corresponding to section 66 of the Indian Income-tax Act, 1922] - High Court - Reference to - Assessment year 1950-51 - Whether finding of Tribunal as to whether two businesses of assessee are separate businesses or are two branches of same business, is a finding of fact which cannot be made foundation for a question of law - Held, yes Section 72 of the Income-tax Act, 1961 [Corresponding to Section 24(2) of the Indian Income-tax Act, 1922] - Losses - Carry forward & set off of business losses - Assessment year 1950-51 - Assessee-company, which was dealing in number of commodities, discontinued its dealing in one commodity and concentrated its attention on dealings in another commodity - Whether on facts, assessee could not be said to carry on another business and thus, loss incurred in respect of one commodity could be set off against income of other commodity - Held, yes FACTS The assessee company was carrying on business on sewing machines and accessories. Owing to the outbreak of hostilities in Western Europe in the year 1939, it was impossible for the assessee to import the machines from Germany and it was, accordingly, compelled by force of circumstances to utilise its working capital for the purpose of holding securities and in dealing with them. Towards the end of 1948 the assessee was again in a position to resume the normal activities in sewing machines and accessories, whereafter it was resolved that the assessee was no longer interested in stock-exchange investments and all securities held by it be sold. By selling certain shares assessee incurred a loss. In the assessment for 1949-50, this loss was described in the profit and loss statement as loss in sale of investments and was claimed in the company's return as business loss and was allowed as such by the ITO. In the assessment for 1950-51, the assessee claimed to carry forward and set off the unabsorbed loss of 1948 against the profits of the assessee's business in sewing machines and accessories in the year 1949 on the ground that the business of the assessee was that of merchants who purchased and sold not only sewing machines and accessories but…

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